Vis-Min transmission linkage tied to WESM, ASEAN interconnection

by Myrna Velasco – January 31, 2016

from Manila Bulletin

If a power transmission interconnection will finally happen between Visayas and Mindanao, consumers in the area have been seeking that such shall be tied up to the establishment of a functioning Wholesale Electricity Spot Market (WESM) in the grid as well as eventual linkage to the envisioned Asean Power Grid.

“The interconnection between Visayas and Mindanao grids follows a long-term trajectory – not just Philippines but on ASEAN vision also,” Romeo Montenegro, director for Investment Promotions and Public Affairs of the Mindanao Development Authority (MinDA) has noted.

Transmission operator National Grid Corporation of the Philippines (NGCP) is currently advancing a second feasibility study on a link-up traversing Negros-Zamboanga route, as the original target via Leyte-Mindanao had not been economically feasible.

Montenegro stressed the first step they would want to happen is the establishment of a WESM, a viable one to finally replace the suspended Interim Mindanao Electricity Market.

“We really want to look at deploying a Wholesale Electricity Spot Market in Mindanao, but one essential requirement is to interconnect Visayas and Mindanao to expand that market, otherwise, we will just be operating a very small Mindanao market,” he noted.

Additionally, he emphasized that the Mindanao power spot market shall underpin the viability of planned renewable energy (RE) investments in the area.

Montenegro explained “we want to test-case the viability of operating a power market and we needed that market to make our RE viable.”

He opined that without a WESM in the area, the feed-in-tariff as incentive to RE developments may still be rendered futile if there is no market that will call for their capacity dispatch.

“If there’s no WESM to support the dispatch of RE – despite the FIT, RE will never be palatable and attractive in Mindanao,” Montenegro expounded.

On a bigger scale, he asserted that “interconnection between Mindanao and Visayas to Luzon must be part of the long-term because what’s being looked at is Asean Power Grid.”

Given the geographical strain of the Philippines, its power link-up with neighbors in Southeast Asia is turning out to be a major hurdle.

Nevertheless, the country’s energy planners and policymakers are still looking forward to a future that such can be made feasible not only with technology advancements but also on the level of maturities of power markets in the region.

“Looking at the long-term, it (interconnection) will be beneficial for Mindanao, it’s about having additional sources from Luzon and Visayas. If we look at the trajectory at how the portfolio looks – if Luzon has thinning reserves, Mindanao can share its capacity for Luzon and Visayas,” Montenegro expounded.